SWN Blog

2017 CMBS debacle? We'll see but unlikely

2010-11-08T12:26:00.001-07:00

We had a conference last week where one of the speakers predicted the "2015-2017 CMBS vintage, impending roll-over is going to cause massive problems, making today's distressed markets look like a walk in the park". I disagree: There's too much big private equity/ REIT money that: needs to capture yields deploy vast quantities of customer funds eating away at their capital

$100 bln a month in QE2 baked into pie?

2010-10-19T07:09:00.001-07:00

(It has been a long time since I have posted. I look forward to re-postings to begin more frequently. We look like we're entering a more interesting phase...) From Bloomberg: It would be a major surprise if the Fed didn't do more quantitative easing -- creating money by enlarging the central bank's balance sheet with the purchase of securities -- at its next meeting. Failing to

FT: Long live the Euro - at parity with the dollar

2010-05-26T06:05:00.001-07:00

The Euro is crumbling. Does this mean that the single currency project is nearing its end? Not quite. In fact, if well managed, the euro's depreciation is just what the doctor ordered to complement the much-needed fiscal consolidation in Greece as well as in the rest of southern Europe. Somewhat paradoxically, a weaker euro is the precondition for its survival. Markets have their own ways to

ING's New Australian Mortgage: No Principal Payback

2010-05-25T11:24:00.001-07:00

Myths that home prices rise forever and interest rates stay low forever are alive and well in Australia. Please consider this amazing story of corporate insanity as described in the Sunday Telegraph - Revealed: The home loan that could save you a fortune. ING Direct, Australia's fifth largest lender, is preparing to sell loans that have no fixed term and no requirement to repay any capital

Capital Access for Main Street (CAMS)

2010-05-17T17:51:00.001-07:00

WASHINGTON, DC-A new bill introduced by US Reps. Ed Perlmutter and Mike Coffman might, if it is passed into law, alleviate some of the pressure small banks are experiencing with lending to commercial real estate projects. The bill, HR 5249, Capital Access for Main Street (CAMS), will temporarily allow small banks with under $10 billion in assets to amortize their losses on commercial real

WSJ Bulldoze Economics: Detroit to buldoze 10,000 homes

2010-05-14T12:03:00.001-07:00

WSJ: Detroit Mayor Dave Bing has pledged to knock down 10,000 structures in his first term as part of a nascent plan to "right-size" Detroit, or reconfigure the city to reflect its shrinking population. When it's all over, said Karla Henderson, director of the Detroit Building Department, "There's going to be a lot of empty space." Even when the demolitions are complete,

Disclosure Requirements Foil MBS Plans

2010-05-14T11:58:00.000-07:00

Asset Backed Alert: It's proving more difficult than anticipated for banks to issue bonds backed by seasoned home loans. The difficulties stem from loan-specific "representations and warranties" that the ASF deemed necessary, especially in cases where the issuer didn't originate the credits or when servicing was initially handled by another company. The belief was that it would be fairly

"The rally in Treasuries is over,"

2010-03-29T11:36:00.001-07:00

Bloomberg -"Bonds have seen their best days," Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., said in a March 25 interview with Tom Keene on Bloomberg radio from Pimco's headquarters in Newport Beach, California. While Treasuries returned 0.9 percent this year, they fell after each of the government's three note auctions last week, which drew less

Resolution Fund: Life Support for Too Big To Fail

2010-03-19T06:58:00.001-07:00

Sen. Richard Shelby raised concerns with bankers on Thursday that "too big to fail" would survive if the Chris Dodd bill gets passed. The bill would require that all institutions with more than $50 billion of assets contribute to the fund, which would be used only to resolve troubled systemically important institutions. When "you put the honey pot out there, sometimes it's going to be used

Helmsley Hotel Sale: $170mm

2010-03-10T10:45:00.001-07:00

One for the Trophy Shelf: $170mm Helmsley Hotel Sale (WSJ) Broad Interest and $170 Million Price Tag for Manhattan's Carlton House Show Prime Properties' Continuing AppealThe estate of real-estate baroness Leona Helmsley has signed a deal to sell one of its prime Manhattan hotels for about $170 million, in a sign that investor appetite is keen for trophy assets. The sale of the Helmsley

Apollo Management Said to Buy Citi's Property Investors Unit

2010-03-09T18:30:00.001-07:00

March 9 (Bloomberg) -- Apollo Management LP agreed to buy Citigroup Inc.'s real estate investment unit, according to a person with knowledge of the deal. The purchase of Citi Property Investors will more than triple New York-based Apollo's real estate assets, said the person, who asked not to be named because the negotiations are private. The portfolio includes 65 investments in 26

FDIC Loan Sales: Participations Cause "Mark" Concern

2010-03-08T09:27:00.001-07:00

From James Sterngold at Bloomberg via Calculated Risk: A Federal Deposit Insurance Corp. plan to auction more than $1 billion in assets seized from failed banks next month ... may trigger writedowns that weaken lenders nationwide....The auctions may have wider repercussions. Of the $50.4 billion in loans seized from failed banks currently held by the FDIC, 63 percent involve participations

FT Letter: Interesting and scary...

2010-03-08T09:24:00.001-07:00

Right diagnosis, now for the cure From Mr Eugene D. Cohen. Sir, Mort Zuckernman ("America must help its homeowners", March 5) is right that a major economic recovery will not happen until the housing market is fixed, and that US government efforts at mortgage modification to date have been ineffectual, and that

Obama May Prohibit Home-Loan Foreclosures Without HAMP Review

2010-02-25T17:36:00.001-07:00

Feb. 25 (Bloomberg) -- The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government's Home Affordable Modification Program. The proposal, reviewed by lenders last week on a White House conference call, "prohibits referral to foreclosure until borrower is evaluated and found

FDIC leases almost 151,000 square feet in Schaumburg Illinois

2010-01-26T06:57:00.001-07:00

(Crain's) The Federal Deposit Insurance Corp. has signed a short-term office lease for almost 151,000 square feet in Schaumburg to handle receiverships and asset sales for its growing roster of failed Midwestern banks. http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=36807

Managing the Crisis: Is this the FDIC Playbook?

2010-01-25T12:41:00.001-07:00

Could the following be the FDIC "securitization" playbook? For those that have interest, please consider reading the following. From and FDIC document called "MANAGING THE CRISIS" In October 1990, one year after the Resolution Trust Corporation (RTC) was created, a securitization program was established to facilitate the sale of mortgage loans. The following, straight from the FDIC's

FT: FDIC to securitize bank debt

2010-01-25T07:45:00.001-07:00

The FT reports that the FDIC is working on plans to package billions of dollars of assets from failed banks into securities, a move that will help restart the still dysfunctional markets for mortgage-backed bonds One option being considered by the FDIC is selling bonds with a US government guarantee in order to ensure they have triple A credit ratings. People involved in discussions said

Annual Economic Survey

2010-01-05T10:11:00.001-07:00

I need your participation.... It is time again for my annual Economic WAG Survey. Please click on the link below to take the survey. I will publish the results next week on the blog. http://FreeOnlineSurveys.com/rendersurvey.asp?sid=wp7ttshj5ddfazn691322 Regards Jay Michalowski

California Lining Up for Federal Bailout

2010-01-05T01:34:00.001-07:00

As discussed, California is lining up for a Federal bailout very soon. Expect New York and NJ to follow. I guess between $100bln and $150bln for all the states would sound just about right. Ask yourself, why are their muni bonds trading so well? Is it because smart money already knows that bailouts are forthcoming? Enjoy the New Year, there are more of these {GMAC, FNMA, FHLMC}

Treasury Gives FNMA/FHLMC Keys to Printing Press

2009-12-24T19:59:00.001-07:00

Treasury gives FNMA/FHLMC keys to printing press. Folks, this is your government, your money. Read this story. You couldn't make this stuff up. California is next. NEW YORK (AP) -- Just as the nation's biggest banks repay their taxpayer lifelines, the government said Thursday it would offer significant new financial support to Fannie Mae and Freddie Mac, the beleaguered mortgage giants,

Video: Community Banks on PBS last night.

2009-12-24T06:25:00.001-07:00

Video: Community Banks on PBS last night. Wishing everyone a very Merry Christmas. http://www.youtube.com/watch?v=f58gJaMIi-c Regards Jay

Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail

2009-12-15T07:39:00.001-07:00

The mantra is "raise more capital" and back into your oversized balance sheet, and not "reduce your asset size" to a managable (non implied govt guarantee size) level. Volker: "we need to produce more, finance less". From the FT this morning: "First, equity capital must be increased. This year, regulators shut down more than 100 banks that were undercapitalised. Smaller banks are now

CMBS Comeback? We will see...

2009-12-13T14:35:00.001-07:00

The commercial mortgage bond securitization window that has been closed for nearly two years during this recession has reopened for business in the last few weeks and investors have lined up encouragingly to take advantage of a new round of CMBS offerings. Several investment banks have announced that they are firing up their conduit lending programs and will begin to originate and warehouse

Is the Fed positioning to tighten?

2009-12-04T08:44:00.002-07:00

Is the Fed positioning to tighten? The Fed on Tuesday "conducted mock reverse repos on $180mm" to "test the market. $180mm? That's a test? That is an absolute miniscule par size of a test, and they have been doing Repos and Reverse Repos with the Primary Dealers daily for cash management purposes for years. Granted, for the past 2 years, they have been doing nothing but adding via "repos" so

Bernanke to "get bye"

2009-12-04T08:18:00.000-07:00

"The Fed chairman will have won the battle but lost the war if Congress strips the Fed of its authority to regulate banks," said an economist at Bank of Tokyo-Mitsubishi, NY. "We shouldn't have had to go through what we did for the last two years, had there been cops on the street doing their job, telling us what was going on, and allowing us to avoid the problem in the first

Amtrust Bank Holding Company Files BK

2009-12-02T10:54:00.001-07:00

AmTrust Financial Corp., (the Bank Holding Company) owner of the Cleveland-based AmTrust Bank that expanded rapidly into Florida and Arizona, filed for bankruptcy, blaming investments in home loans that lost value in the recession. SNL cites Lawrence White, a former Federal Home Loan Bank Board member and now an economist at New York University's Stern School of Business,

Will the Fed step up? Companies issue bonds to pay big dividends

2009-12-02T09:38:00.001-07:00

From the FT http://www.ft.com/cms/s/0/0be10966-dee4-11de-adff-00144feab49a.html?nclick_check=1 Several dividend-recap attempts have been mounted, including one involving the Booz Allen Hamilton consultancy, which is arranging $350m in loans that is likely to help pay a $550m dividend to Carlyle, its private equity owner.Carlyle said that after the proposed dividend, Booz Allen

CRE Recovery Rates on Foreclosed Loans

2009-12-01T08:12:00.001-07:00

Last month, Real Capital Analytics performed an analysis of the recovery rates on 145 commercial mortgages liquidated in 2009. The report was the best data we've seen on expected recovery rates for non-performing CRE loans. A few highlights: Before costs and fees, which may range between 5-10%, the average recovery rate ("RR") was 60% on loan principal amounts. Construction

Inflationist Thinking: 1919

2009-11-30T11:07:00.001-07:00

John Maynard Keynes.... "By a continuing process of inflation, governments can confiscate secretly and unobserved, an important part of the wealth of its citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in such a manner

Is the Fed not concerned about the "too big to fail" model?

2009-11-20T06:41:00.001-07:00

It appears that the Fed and this administration are going to keep the "too big to fail" model. The following article in today's Bloomberg points out that the Fed are more concerned if these banks "have enough capital for the risks they take" rather then focusing on the reduction in risk and the bloated size of assets on their respective balance sheets. If the Fed were not happy with the

Some T-Bills Due Jan, Feb Are Trading With Negative Rates

2009-11-19T19:47:00.001-07:00

Ask yourself, Why are people accepting to pay the govt to keep their dollars safe when the stock and bond markets are at their highs? Why? Is there too much $$$ in this system? Are people so unconvinced about this "recovery" and are loathe to extend risk, that they would much rather willingly take a negative yield? As I wrote yesterday, we are not operating in a vacuum. Folks, be

FDIC Seen Rejiggering Structured Offerings

2009-11-19T07:41:00.001-07:00

From late yesterday: FDIC Seen Rejiggering Structured Offerings The FDIC is removing an incentive it had built into the loan sale transactions. The change was greeted with disbelief by investors who described the new structure as having a declining promote. In its initial offerings, the agency would sell stakes of 20 percent in portfolios to investors. The stakes it sold would be

Obama's wake up call

2009-11-18T23:34:00.001-07:00

I personally feel that today was a very interesting day, because I believe that Obama had the big "wake up" call. His moment was today. To me, the inflection point was this trip to China. It was a real eye opener. To me, it appears that finally has dawned on the Administration (and soon Congress) that they have limited latitude for "new" budget deficit/ideas to lean-on. The

NYT-Pathology of a Crisis

2009-11-18T22:23:00.000-07:00

From the New York Times - "About 600 small banks are in danger of collapsing because of troubled real estate loans if they do not shore up their finances soon, according to the firm. In what sounds like an episode of "CSI: Wall Street," dozens of government investigators the coroners of the financial crisis are conducting post-mortems on failed lenders across the nation.

Big News: Obama: Too much debt could fuel double-dip recession

2009-11-18T13:15:00.001-07:00

Obama, fresh from a verbal spanking from the Chinese, had an epiphany today....Remember this: Try replacing the word "credit" with the words "go into more debt" every time you read, or hear the word "credit" from this administration. > Obama said today...."It is important to recognize if we keep on adding to the debt , even in

FDIC CRE Loan-Recovery Rate Falls to .29 cents

2009-11-18T06:01:00.001-07:00
The FDIC recovered $497.3 million, .29 cents or 29.6 percent of the face value of commercial real estate loans it sold during the third quarter. That's the lowest recovery rate the agency has had since its whole-loan sales program got into high gear late last year and could be explained in part by the types of assets that it is funneling through the whole-loan sales channel.

Dazed and Confused: In Fed We Trust: Ben Bernanke's War on the Great Panic

2009-11-17T18:42:00.001-07:00
David Wessel's book, In Fed We Trust: Ben Bernanke's War on the Great Panic, is the definitive chronicle of the 2007-2009 financial crisis, but it is much more.

FDIC Speaks More Softly

2009-11-16T18:20:00.001-07:00
In a move that should help stressed banks avoid public relations fiascoes, the FDIC has toned down the harsh wording of orders it issues to such institutions The FDIC changed the name of its cease-and-desist order to the less ominous-sounding "consent order" (a term already used by other regulators) David Barr, an FDIC spokesman, said that the traditional cease-and-desist

Problem Bank List Nov 13, 2009 (Unofficial) from Calculated Risk

2009-11-15T10:10:00.001-07:00
Problem Bank List Nov 13, 2009 (Unofficial) from Calculated Risk Columns are sortable so you may sort by state. Click on headers to sort. Consider taking 10 minutes to read just one "Cease & Desist" letter to see what these banks have to do in order to stay alive. DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be

Bair Says Using TARP as Bank Capital Helped Fuel Public Outrage

2009-11-13T15:49:00.000-07:00
Bair said in an interview for "The NewsHour with Jim Lehrer" on PBS, which released excerpts from tonight's broadcast. "It's had a terrible, terrible impact on public attitudes toward the financial systems, toward the regulatory community." Given the urgency at the time, no one should be held accountable "for not thinking all this through," Bair said. "I think it was not a good idea." <

White House Now Says Dodds Plan Will Curb Ability to Fight Crisis

2009-11-13T12:10:00.000-07:00
Dodd's bill would create a single regulator called the Financial Institutions Regulatory Administration. for banks, leaving the Fed to focus on monetary policy, while the Obama administration wants to give the Fed expanded authority to oversee the biggest financial companies. The new agency would include the bank supervision powers of four agencies -- the

Goldman Pays Junior CDOs Before 'Junk' Senior Classes

2009-11-12T15:44:00.001-07:00
Goldman Sachs Group Inc. paid off at face value some junior-ranking slices of two collateralized debt obligations at the potential expense of more-senior classes that now are likely to default, according to Fitch Ratings. The moves are unusual in that the most senior creditors are typically the first in line to get paid. The disclosure of Goldman Sachs's move adds to

FHA: "They're running on empty"

2009-11-12T10:12:00.001-07:00
The FHA said Thursday morning that its cash reserves had dwindled significantly in the last year after a record drop in home prices. The results of the F.H.A.'s annual audit showed the agency's capital reserves to be 0.53 percent, far under the 2 percent minimum mandated by Congress. A year

Prudent Guidelines: WSJ Banks Hasten to Adopt New Loan Rules

2009-11-12T06:29:00.001-07:00
"We will push banks to be realistic [about losses] and will drag the banks out of denial if that's what we need to do," Tim Long, senior deputy comptroller at the Office of the Comptroller of the Currency, said in an interview Tuesday. Banks are planning to review loans now considered nonperforming to determine if they can be reclassified under the "Prudent Guidelines" announced Oct.

States Fiscal Woes:

2009-11-11T04:59:00.001-07:00

TARP Bank costs $298mm plus another $1.4 bil

2009-11-08T19:21:00.001-07:00
San Francisco's United Commercial Bank (UCBH Holdings, Inc.) recieved $298,737,000 under the Troubled Asset Relief Program one year ago. Toppled by loan losses and misstated financial reports, San Francisco's United Commercial Bank was shut down by regulators Friday night United Commercial's collapse may cause a greater-than-usual stir because a year ago the federal government

CDO, CMO, Real Estate and Mortgage Recap

2009-11-07T08:38:00.001-07:00
November 5 Bloomberg (Pierre Paulden): "Rising prices of collateralized loan obligations may signal higher fees for managers of the securities such as Highland Capital Management LP, Aladdin Capital Holdings LLC and KKR & Co. and spur loan sales, according to strategists. The lowest-rated pieces of CLOs, which

Unemployment in U.S. Jumps to 10.2%, Payrolls Fall by 190,000

2009-11-06T06:44:00.001-07:00
The so-called underemployment rate -- which includes part- time workers who'd prefer a full-time position and people who want work but have given up looking -- reached a record 17.5 percent from 17 percent in September. Payrolls fell by 190,000 Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 61,000 workers after cuts of

Allstate Exits Muni Market Citing Borrowers "not in great shape"

2009-11-05T19:54:00.001-07:00
Allstate Corp., the largest publicly traded U.S. home and auto insurer, is paring its municipal-bond holdings because state and local governments are "not in great shape," CEO Thomas Wilson said. "If you look at their balance sheets or income statements and put it in financial terms, they are not in great shape." State and local govt don't have the budgets to honor

FNMA to become the nations landlord: Renting Properties

2009-11-05T09:55:00.001-07:00
Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday. The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that. The rental program

Daily Telegraph UK: It is Japan we should be worrying about, not America

2009-11-04T16:42:00.001-07:00
{This doesn't excuse our horrible fiscal record, but is definitely something we should all be aware of.} It is Japan we should be worrying about, not America Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit

Commercial Mortgages: Just so you know the numbers

2009-11-03T20:20:00.001-07:00
According to testimony of Jon D. Greenlee, Associate Director, Division of Banking Supervision at the Federal Reserve At the end of the second quarter of 2009, approximately: $3.5 trillion of outstanding debt was associated with CRE, including loans for multifamily housing developments. $1.70 trillion was held on the books of banks and thrifts, and $900 billion represented

1 of 2 Commercial Real Estate Price Indexes shows bottoming

2009-11-03T19:39:00.001-07:00
1 of 2 Commercial Real Estate Price Indexes shows bottoming: One index is down 35%, and the other index is down 41% TBI or The Transaction Based Index is an index for commercial properties sold by major institutional investors, and would generally be less subject to distress assets, Released quarterly, the 4.4 percent increase in TBI for the Q3'09 is the first positive price change in

Another view of the "new normal"

2009-11-02T18:47:00.001-07:00
Consumers appear to have for now taken a vow of frugality. Whether by necessity or choice, prudence seems the order of the day. Does that mean consumers are not going to come out to play in the land of increased personal consumption any time soon? We think that's the theme, along with continued household balance sheet reconciliation that must come. Is monetary policy

FDIC says Keep the Assets On your Balance Sheet

2009-11-01T16:24:00.001-07:00
{One simple observation...Didn't our congressmen authorize $758bln to the Fed get these toxic assets off the banks balance sheets? Wasn't that the foundation of the bailout? } On Friday the FDIC, Fed, and OCC provided guidance for bank examiners and financial institutions working with commercial property owners. This guidance allow banks to keep loans on their books as "

72% of Citigroups Outstanding Credit is in Unsecured Credit Cards

2009-11-01T12:00:00.001-07:00
72% of Citigroups Outstanding Credit is in Unsecured / Uncollateralized Credit Card Debt Over the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup. In previous instances, the bank came back from the crisis and prospered. Citigroup has looming problems in its huge credit card

Next Fridays Unemployment Number: Expect the worst...

2009-11-01T08:09:00.001-07:00
Next Fridays Unemployment Number: Expect the worst... Friday's unemployment report may reveal an unemployment rate at or even above 10%. Whether the number is 9.9 or 10.1 is not the issue. The key is that chronic and very high unemployment is going to be with us for a very long time. The U-6, or underemployment rate, is likely to be 18%. The rate for

FNMA and FHLMC Preferred Stock Sink Banks

2009-10-31T08:58:00.001-07:00
{Banks were allowed to pledge FNMA and FHLMC preferred stock as Tier 1 Capital. The reasoning was that the GSE's were as good as gold, and the government had their back. When the GSE's were taken into conservatorship, the gov't made good on their pledge to honor all the debt of the GSE's, but 'zero'd out' the preferred stock. FBOP happened to have quite a bit of this preferred

Injunction Sought to Keep A.I.G. Assets in California

2009-10-30T19:33:00.001-07:00
{If the government won't regulate the companies, file a civil suit like this woman in California did against AIG. Could this be the next step for shareholders of zombie banks that get taken over? Read on...} Lawyers in California asked a judge on Thursday to bar AIG from transferring money out of the state for 90 days, out of concern that the company may not have enough readily available

Mortgage Madness:Doug Nolan

2009-10-30T17:27:00.001-07:00
In the five years preceding the Lehman collapse, benchmark Fannie Mae MBS yields averaged 5.60%. A very strong case can be made that Fannie, Freddie and the entire mortgage Bubble pushed mortgage borrowing costs artificially low. Over the past year, as the Fed has been building its Trillion dollar MBS holding, benchmark yields averaged 4.30%. Fed officials have been talking confidently

Wilbur Ross talks up his book: Proceed in CRE with Caution

2009-10-30T09:55:00.001-07:00
Wilbur Ross, CEO of WL Ross & Co. LLC, a PPiP approved buyer, is (as we say) "talking his book up". Naturally we would expect him to paint a dire picture in the commercial RE markets (so he can buy more and more), but his following comments are nonetheless worthy of some attention. "All of the components of real estate value are going in the wrong direction simultaneously. Occupancy rates

Some debt issuers are finding they don't need credit ratings.

2009-10-29T14:17:00.001-07:00
Credit Ratings Now Optional, Firms Find; Some debt issuers are finding they don't need credit ratings. Speed is driving part of the push toward offerings without ratings firms' rubber stamps. Debt issuers are paying slightly more money to sell unrated deals, but they are likely to get done more quickly. Obtaining a credit rating for a securitization, particularly one that is backed by

Banks Seem Less Concerned About Their CRE Assets, than Their Borrowers

2009-10-28T18:52:00.001-07:00
Despite Erosion in CRE Assets, Bankers Ask: "What? Me Worry?" Banks Seem Less Concerned About Their CRE Assets, than Their Borrowers So why aren't banks seemingly more worried? The answer from many of them is because this isn't residential real estate. If a homebuilder or homebuyer gets in trouble, the loan ends up in trouble because there is no cash flow to support the deal. That's not

The Shaping of Regulatory Reform Begins in the House

2009-10-27T19:42:00.001-07:00
The Shaping of Regulatory Reform Begins in the House A U.S. House committee is calling for financial firms with more than $10 billion in assets to pay the costs after the government takes over companies deemed too big to fail, according to draft legislation released late today. Companies including insurers and hedge funds, not just banks, (above the $10 billion threshold) would

Clinging to Misguided Monetary Mentalities:Doug Nolan

2009-10-23T14:03:00.004-07:00
Clinging to Misguided Monetary Mentalities by Doug NolanI am posting this because Doug again points out the cold hard misguided rationale in the minds of todays economists. Paul Krugman is the new John Meynard Keynes of the day; feel free to throw Bernanke and Greenspan into the mix too. However all three virtually ignore some form of discipline, prudence etc. Essentially, their motto and

Opus Parent Closing

2009-10-23T13:20:00.001-07:00
CEO Mark Rauenhorst Steps Down Mark Rauenhorst will become a consultant with Rauenhorst Trusts, which owns the surviving Opus companies "He will lend his more than 27 years of experience at Opus to advise on restructuring and investment strategies" Gerry Rauenhorst, Mark's father, started Opus. Three of its five subsidiaries, Opus West, Opus South and Opus East, went

Obama to Propose Community Bank Relief

2009-10-21T06:18:00.001-07:00
Obama wants smaller community banks to have greater access to the government's $700 billion financial rescue fund to assist small businesses that are still suffering from a prolonged credit crunch. Obama on Wednesday plans to announce a package of initiatives designed to increase lending, including a request that Congress increase caps for existing Small Business Administration

FDIC announces 99th bank failure

2009-10-16T20:08:00.001-07:00
Regulators close San Joaquin Bank, raising the national tally to 99 for the year. The closure will cost the FDIC $103 million. The nation's bank casualties tallied 99 Friday night when state regulators closed San Joaquin Bank, based in Bakersfield, California. This was the tenth bank to fail in that state. There are about 8,000 banks in the nation, and an average of 10 banks have failed

Our Banking System and Mark to Market

2009-10-16T05:33:00.000-07:00
Consider an Illinois lender with $3.6 billion of assets on its books called Midwest Banc Holdings Inc. Midwest said its loans had a fair value of $2.53 billion as of June 30, which was about $35 million more than their carrying amount on the bank's balance sheet. There are reasons to be skeptical, though. Fair value is supposed to represent the price at which an asset would change hands

What is Goldmans Secret to Success? Mark to Market

2009-10-16T05:31:00.001-07:00
What is Goldman's Secret to Success? Mark to Market accounting according to its CEO Blankenfein. Before one night last year when Goldman and a few other companies overnight became banks, Goldman was an investment bank, and was required to market their book to the "market" daily. (Remember Lehman was an investment bank, and so was Bear, so Blankenfein's argument is "interesting"), but he

Starwood's Price for Corus Raises Eyebrows

2009-10-15T10:34:00.001-07:00
CMA: Starwood's Price for Corus Raises Eyebrows A Starwood Capital partnership's aggressive winning bid for the real estate assets of Corus Bank has left some market pros asking: Did Barry Sternlicht overpay? {Remember, they are now gainfully employed for the next 4 years, and they allocated their investors capital that otherwise was decaying in .13% T-bills. It is difficult to promise

Pearlstein: "Don't Reinflate the Old Bubbles"

2009-10-15T09:04:00.001-07:00
Pearlstein: "Don't Reinflate the Old Bubbles" ' This is another example of what I call highly questionable central bank policy. I know that 2/3 of all depositors reside in the top 19 banks (Remember? The banks that took the stress test that no one would fail? and the details of the testing methodology that has not been public disclosed?). I recognize that it is in everyone's best interest

The Financial Elite Oligarchy Controls DC: Until It Changes, The Road Remains Long...

2009-10-12T19:19:00.001-07:00
Excerpts from the Atlantic Monthly. The solutions to today's banking problems have been solved hundreds of times before around the world. This article is clear and concise as to what needs to be done. Enjoy our funeral.... The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no

FHA in line for Taxpayer Bailout?

2009-10-08T06:37:00.001-07:00
Do we all just watch this unfold to another unhappy ending like FNMA, FHLMC and others? The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said. "It appears destined for a taxpayer bailout in the next 24 to 36 months,"

Excerpts from Elizabeth Warren Interview; Wash Post

2009-10-08T03:54:00.001-07:00
Here are some excerpts from an interview with Elizabeth Warren, Elizabeth maintains her status as the tax payers best friend in Washington. Jay "A year ago when we talked about why we needed to pass the TARP, why we needed a $700-billion blank check written to the Secretary of Treasury, remember what we were saying. We said the big crisis is toxic assets on the books of the banks. Today

Banking Lessons We Should Have Learned

2009-10-08T03:32:00.001-07:00
Banking Lessons We Should Have Learned Given the importance of banks to the broader economy, regulators "rolling" and "kicking" the problems down the road are not viable options. But the management and shareholders of any bank would be insane to part with such options voluntarily. Banking is a franchise granted by government charter. The existence of government-backed deposit

NAHB wants Tax Credit Enlarged and Extended

2009-10-08T02:34:00.000-07:00
National Association of Home Builders wants Tax Credit Enlarged and Extended NAHB calls for extending the home buyer tax credit through Nov. 30, 2010 and making it available to all purchasers of a principal residence; this they argue would result in an additional 383,000 home sales ..and to expand the tax credit from $8,000 to $15,000. If expanded the cost would be $75 billion

Daily Telegraph UK: Oil will no longer be priced in dollars

2009-10-05T16:26:00.001-07:00
In the most profound financial change in recent Middle East history, Gulf Arabs are planning along with China, Russia, Japan and France to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia

Apollo/CIBC Launch Mortgage Fund: Make your own conclusion...

2009-10-02T08:21:00.001-07:00
The terms of this deal sound unusual in light of today's marketplace. Here are the the terms. Both Apollo and CIBC put in a total of 3% equity, you get to put in the remaining 97% of equity. The fund then offers fixed-rate loans with coupons of 8-10%; Then you the fund investor receives just a 7% preferred return; You split the profits. For your 97% you get 80% of the profits

In effort to deleverage, Macerich sells off 49.9%

2009-10-02T06:15:00.001-07:00
In effort to deleverage, Macerich sells off 49.9% ownership of 2 of their malls, and raises cash. Banks sitting on the sidelines unable to sell the REO's and NPL's festering on their balance sheet should seriously consider taking this play out of the Macerich playbook. This isn't rocket science. But the key is finding an investor that will take less then majority control. That said

Is The FDIC Killing Short Sales?

2009-10-01T12:03:00.001-07:00
Is The FDIC Killing Short Sales?When the FDIC is forced by the banking regulators to take over the receivership of a closed down bank, they seek buyers of the banks. There are 3 structures they use - Loss Sharing- Whole bank is purchased with a loss sharing agreement- "Heads I win, tails you lose"...FDIC bears much of the losses. - Negative or Discount Acquisition- Whole bank is purchased

Is too big to fail the right way to build a banking system?

2009-09-29T17:56:00.001-07:00
Is too big to fail the right way to build a banking system? Smaller banks beat their behemoth brethren on nearly every criterion important to shareholders Smaller banks make better loans, but lend less money in proportion to their deposits. If the big banks in the US kept their loan-to-deposit

TALF Mercedes Subordination Levels of 59%

2009-09-29T07:54:00.001-07:00
Price guidance is out on Mercedes-Benz Financial's $1.08 billion TALF-able bond. The largest triple-A rated tranche of the deal (the TALF-able part), is backed by auto loans, and totals $445 million; price guidance is in the 40-45 basis point area over a benchmark. It is likely to price on Wednesday, just ahead of the next loan application deadline for the Fed's Term Asset-Backed Securities

NYT: The FDIC and Banks- A real shame and sham

2009-09-28T09:16:00.000-07:00
The FDIC meets on Tuesday, and will have to sort through several options for raising tens of billions of dollars of extra cash {because their insurance fund is just about broke}. The NYT suggests these are the three choices: The best solution is to have the banks "prepay" their regular premiums, say for the next two years or so to shore up the FDIC fund. The next best alternative

The stock market "bull" argument; Tons of ca$h

2009-09-28T06:30:00.001-07:00
Americans holding $3.5 trillion in cash are giving money managers increasing confidence that the stock market rally under President Barack Obama will continue through the end of the year. Should inflation exceed returns on money-market accounts, that may cause more investors to buy equities "Stocks can easily go higher, If you print the money, they can go anywhere." "

US Gov't borrowing is not crowding out private borrowings: All debt issuance is booming

2009-09-26T08:55:00.001-07:00
Normally, when gov't borrowing explodes, economist predict that this will sap capital from the private sector. Today, with so much liquidity schloshing around the system this doesn't appear to be the case. The US Treasury issued a record $29 billion offering of seven-year notes, a record $40 billion sale of 5yr

Fresh bailouts for smaller banks being weighed

2009-09-25T17:23:00.000-07:00
Treasury officials and regulators are weighing a fresh round of bailouts for banks that were deemed too risky to qualify for earlier aid. It may be limited to banks with less than $5 billion on their books. "They want to give another opportunity for some of the community banks." The banks could be required to raise matching money in the private markets Barney Frank has

Shipping prices have indeed crashed...

2009-09-25T09:43:00.000-07:00
As consumer spending in the West came to a grinding halt, literally thousands of factories on the other side of the world in China closed, displacing hundreds of thousands of workers. A man very familiar with San Miguel's operations in China says business in the southern part of the country has come to a near-standstill, with all the workers having gone back to the interior provinces

FDIC Unveils 2 Big Troubled-Loan Offerings

2009-09-25T08:33:00.001-07:00
Investors this week got their first detailed look at 3 large distressed-loan portfolios in which the FDIC is offering minority stakes. There is a $1.1 billion package of commercial mortgages and land loans via Deutsche Bank and an $861.5 million portfolio of construction and land loans via the team of Midland Loan Services and Pentalpha Capital. Each portfolio is divided into two pools,

Citi's $1.40B Deal Eligible For TALF Funds

2009-09-24T12:29:00.000-07:00
While submitted and accepted AAA tranches to the TALF are important measures of its success, do not overlook the knock-on effects that the TALF program is having on the broader ABS and CMBS market. The mere fact that a particular AAA trance is "eligible" for TALF submission is having tremendous positive knock-on effect for the market at large. Those benefits being tighter spread compression,

The rolling loan....

2009-09-24T06:29:00.000-07:00
{I am rehashing this move on Sep 16 again because after 4 meetings this week with asset managers, it seems that they all heard the announcement, but haven't really just yet thought thru what this means for the trillions of mortgages both above and under water. I contest that it is easy to take an underwater mortgage, and "refinance, modify, rewrite it" to make 2 mortgages....one that is

More than 80,000 distressed office, industrial and shopping center properties

2009-09-23T17:53:00.000-07:00
CoStar Group identified more than 80,000 distressed office, industrial and shopping center properties (defined as those that are currently 60% or more vacant.) In addition, we tallied more than $79 billion in seriously delinquent CRE loans and another $6.3 billion in foreclosed bank-held CRE properties. Nationally, The average price of office buildings sold in 2007 was nearly $219/square

Only 10 investors allowed to bid for Corus's assets

2009-09-23T06:33:00.001-07:00
Only 10 investors are expected to be allowed to submit bids to the Federal Deposit Insurance Corp. by Friday for $5 billion in condominium loans and other property held by the failed Corus Bank, in a key test of U.S. commercial real-estate values. "We are offering specialized investors an opportunity to purchase an equity stake" in up to $5 billion of Corus's loans, an FDIC spokesman said.

Developers Diversified Realty working to re-structure a large portion of the loans to be TALF-eligible.

2009-09-21T09:06:00.000-07:00
Developers Diversified Realty (NYSE: DDR) today announces progress on de-leveraging initiatives and provides the following updates on recent company activities: Mortgage financing: As previously disclosed, the Company continues to make progress on two large mortgage financings, each secured by a pool of assets, and now expects that if both were completed, proceeds would exceed the original

FT: Maybe the banks are in worse trouble than we realise

2009-09-21T09:01:00.000-07:00
FT: Maybe the banks are in worse trouble than we realise To illustrate the hazards involved, consider a recent analysis from The Institutional Risk Analyst, a US banking consultancy. This ranks US banks by stress level from A+ to F. Total assets with the F-rated banks - those nearest the edge - are a

Uncle Sam Bets the House on Mortgages

2009-09-19T07:55:00.001-07:00
"More than half of U.S. residential mortgages are being made by just three large banks. It is a stunning change, but is it good for the housing market, and to what extent will it boost profits over the long term for this elite trio: Wells Fargo, Bank of America, and J.P. Morgan Chase? Right now, housing remains on government life support. Treasury-backed entities are guaranteeing about

Bair: FDIC to tap Treasury Line of Credit: Mark to market is bad now...

2009-09-18T21:23:00.001-07:00
{You can read her quotes today from the FT} FDIC considers tapping Treasury credit lineBy Joanna Chung in New York The FDIC is considering tapping its credit line of up to $500bn from the US Treasury as it explores options on how to replenish the dwindling fund protecting depositors, said Sheila Bair, its chairman. A rising number of bank failures this year has depleted the deposit

Reuters: Investors request $1.4 bln in CMBS TALF loans

2009-09-18T10:48:00.001-07:00
NEW YORK, Sept 17 (Reuters) - Investors requested $1.4 billion in loans in the third round of a Federal Reserve emergency program to boost lending in the ailing commercial real estate sector, the Federal Reserve Bank of New York said on its website on Thursday. Loan requests under the Fed's September Term Asset-Backed Securities Loan Facility (TALF) for existing commercial mortgage-backed

FHA Running out of money? Will they print more?

2009-09-18T07:21:00.000-07:00
Read on. The Federal Housing Administration has been hit so hard by the mortgage crisis that for the first time, the agency's cash reserves will drop below the minimum level set by Congress, FHA officials said. The FHA guaranteed about a quarter of all U.S. home loans made this year, and the reserves are meant as a financial cushion to ensure that the agency can cover unexpected losses. "

A rolling loan gathers no loss: CMBS gets lift from mortgage modification tax rules

2009-09-16T19:55:00.001-07:00
A rolling loan gathers no loss: CMBS gets lift from mortgage modification tax rules. WASHINGTON, Sept 16 (Reuters) - Commercial mortgage backed securities got a lift on Wednesday from new U.S. Internal Revenue Service rules that make it easier to modify securitized mortgages without tax penalties.The rules allow distressed property owners and servicers of mortgage-backed securities to